Here is an example of how IAS 33 - Earnings per Share can be applied in practice:

Assume that Company A has issued 1 million ordinary shares and 100,000 convertible bonds, each convertible into 5 ordinary shares. The bonds were issued on 1 January 2018 at a par value of $1,000 per bond, with a coupon rate of 5% per annum payable semi-annually. The bonds mature on 31 December 2022. The company's net profit for the year ended 31 December 2019 was $5 million, and the effective tax rate is 30%.

To calculate the basic EPS for Company A for the year ended 31 December 2019, we would first need to calculate the weighted average number of ordinary shares outstanding during the period. Assuming that the number of shares outstanding did not change during the year, the weighted average number of shares would be:

Weighted average number of ordinary shares = 1 million

Next, we would need to deduct any preference dividends and taxes from net profit attributable to ordinary shareholders. In this case, there are no preference dividends, but we need to deduct the tax expense of 30%, which would be $1.5 million.

Adjusted net profit attributable to ordinary shareholders = Net profit - Tax expense

= $5 million - $1.5 million

= $3.5 million

Finally, we can calculate the basic EPS as:

Basic EPS = Adjusted net profit attributable to ordinary shareholders / Weighted average number of ordinary shares outstanding

= $3.5 million / 1 million

= $3.50 per share

To calculate the diluted EPS, we would need to adjust the weighted average number of shares outstanding for the potential dilution from the convertible bonds. Assuming that all convertible bonds were converted into ordinary shares, the adjusted weighted average number of shares would be:

Adjusted weighted average number of shares = Ordinary shares + (Convertible bonds x Conversion ratio)

= 1 million + (100,000 x 5)

= 1.5 million

The diluted EPS can then be calculated as:

Diluted EPS = Adjusted net profit attributable to ordinary shareholders / Adjusted weighted average number of ordinary shares outstanding

= $3.5 million / 1.5 million

= $2.33 per share

This example illustrates how the basic and diluted EPS calculations can be applied to a real-world scenario involving ordinary shares and convertible bonds, and how the potential dilution effect can impact the EPS calculation